THAI posts steep loss in first-quarter operations 

Corporate May 17, 2019 01:00

By   THE NATION

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THAI AIRWAYS International Plc (THAI) swung to a steep operating loss of Bt828 million in the first three months of 2019, mainly due to the baht’s appreciation, fierce competition and the US-China trade war.



The airline made an operating profit of Bt3.84 billion for the same period last year.

 President Sumeth Damrongchaitham said the company’s net profit plunged 83.3 per cent in the quarter to Bt456 million due partly to the baht appreciation, high market competition and lower revenue passenger kilometres (RPK) as a result of less available seat kilometres (ASK).

Total income fell 6.9 per cent year-on-year to Bt49.79 billion, while total expenses rose 2.0 per cent to Bt989 million from higher depreciation.

The national carrier had, at the end of the quarter, 90 aircraft in services, compared to 94 in the same period last year . 

Excluding the 20 aircraft of its subsidiary Thai Smile Airways, THAI had only 70 aircraft in actual service.

“We have had less aircraft and passengers amid high competition, thus our income decreased as the operation cost remained the same.

In the first quarter of this year, the airline’s ASK edged down 2.8 per cent while RPK dropped 3.2 per cent. The cabin factor averaged 80.3 per cent, lower than 80.6 per cent in the same period last year.

THAI transported 6.29 million passenger during the period , up 0.6 per cent. 

The company plans to maintain its passenger load factor at an average of 80-85 per cent for the whole of this year.

Sumeth conceded that given the US-China trade war since late last year, in addition to the baht appreciation and price competition, the airline’s cargo-based income dropped 12.9 per cent in the first quarter. 

This year, THAI will focus on generating additional income under the Montra project, aimed at rehabilitating the flagship airline through an integration of THAI and Thai Smile’s management, sale and marketing administration, and search for additional income and non-aviation income.

“The second quarter is the start of the low season in tourism. It’s a difficult period. But we will try to maintain our cabin factor at about 80 per cent with promotions. In this period, we won’t have new expenses. We will try to generate income from cargo, catering and e-commerce businesses. Products worldwide will be gathered into online catalogue and be sold via online and applications,” Sumeth said.

Online channels will be launched in September with the airline’s 20 million existing customers as the target group. The first year of service is expected to see profit of about Bt100-Bt500 million.

Sumeth said the planned procurement of 38 new aircraft is currently under consideration by the Ministry of Transport before being forwarded to the Cabinet.

In regard to the joint investment plan for the maintenance, repair and overhaul (MRO) centre at U-Tapao Airport in Rayong province, THAI has discussed with its partner Airbus, and both have agreed that the European aircraft maker will raise its concerns on the project in a written document for project’s selection committee on June 7, before negotiations and contract-signing.

Meanwhile, ohters aviation firms also show their financial result in the first quarter of this year lower than the same period of last year, according to the companies report to the Stock Exchange of Thailand in this week.

They are including Asia Aviation Plc records net profit Bt497.2 million in the first quarter of this year or dropped 50.48 per cent from the same period of last year. Bangkok Airways Plc reports net profit Bt504.32 million in the first quarter of this year or dropped 29.01 per cent from the same period of last year. As Nok Air Plc reports net loss Bt304.15 million in the first quarter of this year that better than its net loss Bt1.23 billion in the same period of last year.

 

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